The Problem with Passports

One of the most baffling things to me is the way in which very educated people fall for notions with little meaning such as nationalism. The result of this dedication to amorphous ideas as nationalism is that it sometimes makes smart politics but leads to very bad outcomes for the economy. A perfect illustration of this is the immigration policy headache that the United States, among other countries, faces. Many educated people take the view that if immigration must be allowed, then it should be confined to a highly skilled cadre who will contribute to the creation of scientific enterprise and innovation. The obverse of this sensible argument is that any less educated immigrant is not worth allowing to reside in the recipient country.

While commenting in Slate about President Obama's recent decision to suspend any deportation of a selected generation of illegal immigrants, Martin Yglesias demolishes the idea that only highly-skilled immigrants are good for the US economy. In a argument that would be familiar to any keen student of economics, it is clear that immigrants who come in for low wage jobs contribute to economic prosperity because of the linkage that industries and workers create. By providing care work, the enable more households to deploy both parents in the work force and thereby raise overall welfare. One other idea that is less empirically proven but plausible is that allowing for emigration from poor countries would lead to gains that would surpass all economic assistance that comes through foreign assistance between countries. An added advantage of such a programme would be that it would also ensure that corrupt governments have less money to steal because the flow of resources takes place through households. 

With that background, it is obvious that a liberal immigration policy makes economic sense but is not always easy to sell to a patriotic crowd. Another illustration that patriotism can lead to bad economics.